July 13, 2022

NASAA Proposes Revisions to Policy on REITs

NASAA requested comment on proposed revisions to its Statement of Policy Regarding Real Estate Investment Trusts ("REITs"). The deadline for public comment is August 11th.

The revisions are intended to enhance retail investor protections by:

  • supplementing the suitability section on conduct standards for brokers selling non-traded REITs with references to the new best interest standard;

  • updating the net income and net worth financial figures in the suitability section adjusted to inflation;

  • adding standardized concentration limit to the suitability section; and

  • adding "a new prohibition against using gross offering proceeds as an investment objective or strategy to make distributions."

NASAA said it is also considering updates to other sets of guidelines, including as to (i) asset-backed securities, (ii) commodity pools, (iii) equipment leasing and (iv) mortgage programs and real estate programs (other than REITs).